I’m Calling ‘Bullshit’ on Mark Hulbert
When a headline is immediately contradicted by an article’s own author, something is wrong. Seeing it come from a respected source makes it even worse.
Mark Hulbert’s June 7, 2014, column perpetuates the myth of risk-adjusted returns. That absurd theory says that lower portfolio volatility somehow makes up for accepting smaller absolute returns on your long-term money.
His headline shouted that adding a 40% intermediate Treasury bond allocation to an otherwise all-stock portfolio can get “the same returns with half the risk”.
When you read further, though, Mr. Hulbert says that an all-equity SPY equivalent index fund would have earned a 10% average annual return since the start of 1926 versus 8.7% per year for a hybrid (60% stock/40% bond) mix.
How much more would you accumulate by avoiding bonds completely over a typical 40-year career spanning from age 25 through 65? A lot. Here is the answer directly from the SEC’s own web site.
Just days earlier, on May 31, 2014, Mr. Hulbert’s Wall Street Journal column indicated the total returns from small-cap shares had been 11.9% since 1929 while Intermediate-term treasury bonds earned less than half as much, at 5.4% annualized.
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